Fast Company has established the following overhead cost pools and cost drivers for the month of May: Cost Pool Cost Driver Levels Overhead Costs $ 61,200 Purchase orders 60 orders Machine setups 100 setups 47,000 29,000 Electricity 29,000 kilowatt hours The following information pertains to the actual consumption of activity resources for two sample jobs completed during May. Job M1 Job M2 Number of units produced 1,000 510 25 Number of purchase orders 20 Number of setups 20 20 Number of kilowatt hours 510 1,000 Using activity-based costing, what is the overhead cost per unit produced for Job M2?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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